The Economy

Less than a quarter of an hour after opening, the Chinese stock market was closed by an automatic shutdown. This was triggered twice last week by rapid falls of more than 7%. This “circuit-breaker” mechanism was imposed by the government only 5 months ago after equally dramatic losses. The government has now suspended this measure, not from new-found confidence, but as a further turn of panic.

The arrival of the smartphone application “Uber” has thrown the taxi industry into a state of disarray. First launched in June 2009 in San Francisco, the application has spread rapidly and today finds itself in over 300 cities in approximately 58 countries. While it offers many advantages over traditional taxis, including lower rates, it is having serious effects on the living conditions of taxi drivers.

World stock markets have been in meltdown from Shanghai and Shenzhen to London and New York. A sea of red blighted the computer screens of the stock exchanges everywhere in a panic global sell-off. Shock and disbelief among investors was ubiquitous. Even as the Dow Jones claws its way back from its worst losses, extreme volatility pervades the entire system. Could this crash be a one-off event, which will quickly return to normal, or the beginning of a series of shocks in an unstoppable chain of events?

Capitalist apologists—particularly those aligned with the Republican Party—have long referred to the 1% as “job creators.” As this popular myth goes, the capitalists alone are responsible for investing in the economy (“taking risks”), thereby creating the jobs that provide everyone else with a living. The legislative conclusions that flow from this idea include the infamous policy of “trickle-down” or “supply side” economics, which opposes progressive taxation and shifts the burden of funding the government away from the 1% and onto the working class. They justify such policies by arguing that taxation takes money away from the private sector, which the capitalists could otherwise use to invest in the economy. This explanation contains a grain of truth, but unfortunately the outcome doesn’t jibe with the way the capitalist system actually works.